1) SNR is considering a project with an initial cost of $50,000. The project will produce cash inflows of $10,000 a year for the first two years and $12,000 a year for the following three years. What is the payback period? A) 4.23 years B) 5.23 years C) 3.87 years D) 4.79 years E) 4.5 years

2) An investment has an initial cost of $300,000 and a life of four years. This investment will be depreciated by $60,000 a year and will generate the net income shown below. Should this project be accepted based on the average accounting rate of return (AAR) if the required rate is 29.5 percent? Why or why not? A) Yes, because the AAR is greater than 29.5 percent B) No, because the AAR is 29.5 percent C) No, because the AAR is lower than 29.5 percent D) Yes, because the AAR less than 29.5 percent E) Yes, because the AAR is 29.5 percent

3) Steele, Inc., is considering an investment with an initial cost of $155,000 that would be depreciated straight-line to a zero book value over the life of the project. The cash inflows generated by the project are estimated at $76,000 for the first two years and $30,000 for the following two years. What is the internal rate of return? A) 17.09 percent B) 21.15 percent C) 11.34 percent D) 19.54 percent E) 20.45 percent